Thursday, January 5, 2017

T-Bonds on its best day in 6 months

"Buy the election, sell the inauguration"

I support my impression, in the sense that I estimate the rally on Wall Street will continue even a few days more, until close to the assumption to the command of Trump and then come a necessary correction. Morgan Stanley sums it up in an elegant phrase 'Buy the election, sell the inauguration'.

T-Bonds on its best day in 6 months

Yield of 30-year US Treasury bonds TYX today reached 2.96 less than the psychological 3%, its minimum in 5 weeks. Something similar with the 10-year notes, which fell sharply today, standing at 2.36%, all motivated by the poor ADP employment data plus the drop in crude oil prices yesterday, lower inflation and higher bond prices. This has led the yield curve to adopt the flat form, the ideal strategy to buy long-term bonds, or to sell short-term bonds.

The Yield Curve: the short-term bonds depends on the Fed and its RateHikes, the long-term inflation. Today the curve is flattening (Bull Flattener) after the strong Bear Steepener post Trump.

Best commodities behavior in 2016

This chart is for future reference: the assets (stocks, commodities, indices) that performed best in 2016.